179 Iowa Property Tax - editorialpinups

It now seems that it is a priority by Iowa Democrats to reign in property taxes in Iowa.  The Republicans have discussed this for years and now finally the Democrats are putting out suggestions.  I commend both parties for prioritizing the discussion.

Iowa has done a good job of getting rid of the regressive progressive income tax that it used to live under.  The Republican goal of eliminating income taxes completely is admirable and doable if legislators of both parties can issue restraint and determination in spending.

As of this writing the Republicans have not put forth a plan for reducing and possibly eliminating property taxes, but have been discussing with local taxing bodies how and why property taxes are at their levels and alternatives to property taxes.

Democrats are proposing the concepts of caps and credits or subsidies. They propose a four per cent cap on property tax increase plus offering to expand subsidies for retirees and homeowners using said property as their residence.  There are questions that need to be answered such as how things will work.

Neighboring Illinois has a rule with property taxes that the tax rate in any one year for any taxing body can be increased by less than five percent with no accountability. Five percent or higher must be supported by a public hearing. In times of increasing property valuations taxing bodies work hard to keep the rate increase under five percent to avoid the public hearing.

Illinois taxpayers see their property taxes go up eight to fifteen percent and did not see a notice of a public hearing.  The spokesperson for the taxing body doing the increase will say they did not increase the rate, but the value of the property times the current rate gave the tax bill. These spokespersons advertise in a popular persona that they have kept the rate of increase down, which is true.  But you are paying more. Iowa Democrats need to define what the cap is and how to administrate it or they would not be able to escape the current situation.

The problem Republicans have had in reducing or even freezing property taxes is that at the state level they have no direct input into how the tax numbers are generated.  Property taxes have been the main vehicle for generating local revenues for public safety, local roads and services, and local contributions to the education budgets.

State government has an indirect contributing factor as does the federal government. State and federal governments can mandate things and procedures that local governments must do which translates to costs. I am not saying that these mandates and procedures are bad. They exist and somehow need to be addressed.

For example, Cedar Rapids needs to put in sewers in a new subdivision.  New subdivisions must be made according to the current codes. Years ago in many municipalities the code was or there were no direct codes, only one sewer system handling both street runoff and pee, poop, and washer drainage (PPWD). In an early age this all mixed and were dumped in rivers, lakes and ponds.

Eventually processing plants were mandated to clean this waste water which local communities were required to fund.  Eventually local communities complained about the excessive processing during storm and some systems were not made large enough to handle the overages caused by the storms.  So once again PPWD went directly into rivers, lakes and ponds. Common sense and solution laws stated to separate the two to properly use the facilities for PPWD. System managers would have ten or twenty years to separate the two or have a sewage processing plant to handle that size of requirement.

Sewage processing is a necessity for municipalities and cluster areas. Even certain agricultural operations are required to have sewer processing operations. The sewage requirement is not a city planned cost but a requirement to exist in the State of Iowa or the boundaries of the United States.  But it is a cost that needs to be accounted for. Costs such as road maintenance, police and fire are direct costs which municipalities can generally control.

The same with school districts.  Hire a kindergarten or first grade teacher is straight forward.  Supply lunch and breakfast is a direct cost, but the cost can affected by state and federal nutritional guidelines and mandates.  Cost can also be affected by what the student and the student’s family can afford or decide to be responsible to afford. Again, not necessarily bad, but they exist and can affect the financial need.

The second half of the discussion is how do schools, municipalities and other property taxing bodies raise revenue even if they have it at the bare minimums?  Right now it is property tax. Iowa does allows a one percent sales tax rider.  Iowa does supply some funds via state sales tax, but this is not at the control of the local taxing bodies.

The local property tax and fees for services are the only revenue raising capabilities that the local taxing bodies are allowed to implement. Should the state allow local governing bodies to implement sales or income taxes? Should Iowa allow local taxing bodies to set their own sales and income tax rates? Should the state and federal government be forced to pay for the implementation of their rules and mandates? How are the costs to be defined?  If community A is very efficient with their money, should they subsidize community B who may not be as efficient with the funding?

Both sides of this discussion need to be addressed. If there is no discussion or there will be no movement on property tax reduction or elimination. Subsidies are just a mask allowing the government picking winners and losers.  They are not a cure. Cover-ups and masks only hide, they never cure.